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  • Alex Pettee, CFA

Box Office Distress | REITs Rebound | Another Dividend Boost

Summary

  • U.S. equity markets were mixed Thursday as the vaccine-driven "sector rotation" resumed following encouraging employment data this morning and despite a potential setback in Pfizer's initial vaccine deployment.

  • After setting fresh record-highs yesterday, the S&P 500 finished fractionally lower today while the Dow Jones Industrial Average advanced 86 points and the Nasdaq 100 gained 0.3%.

  • Powered by the COVID-sensitive property sectors, real estate equities were among the leaders today. The Equity REIT ETF gained by 0.8% today with 16 of 18 property sectors in positive-territory.

  • Mortgage rates dipped to fresh record-lows last week, which is expected to provide further fuel for the U.S. housing industry. Jobless Claims data was also better-than-expected with continuing claims declining to post-pandemic lows.

  • Another one. Universal Health REIT (UHT) boosted its dividend, becoming the 42nd equity REIT to raise its dividend this year compared to 66 equity REITs that have reduced or suspended their dividend.

Real Estate Daily Recap

U.S. equity markets were mixed Thursday as the vaccine-driven "sector rotation" resumed following encouraging employment data this morning and despite a potential setback in Pfizer's (PFE) initial vaccine deployment. After setting fresh record-highs yesterday, the S&P 500 ETF (SPY) finished fractionally lower today while the Dow Jones Industrial Average (DIA) advanced 86 points and the Nasdaq 100 (QQQ) gained 0.3%. Powered by the COVID-sensitive property sectors, real estate equities were among the leaders today as the broad-based Equity REIT ETF (VNQ) gained by 0.8% today with 16 of the 18 property sectors in positive territory. The Mortgage REIT ETF (REM), meanwhile, gained 0.4% on the day.

The most economically-sensitive segments of the equity market led the way today as 6 of the 11 GICS equity sectors finished in positive territory led by the Energy (XLE), Real Estate (XLRE), and Consumer Discretionary (XLY) sectors. Homebuilders and the broader Hoya Capital Housing Index were also among the leaders today following data from Freddie Mac that showed that mortgage rates dipped to fresh record-lows last week, which is expected to provide further fuel for the U.S. housing industry, which has proven to be a stabilizing force throughout the early post-pandemic economic recovery.

The strong performance from the economically-sensitive sectors today was also driven by encouraging employment data this morning. Initial Jobless Claims ticked lower to 712k - the second-lowest week of initial claims since the pandemic began -declining from last week's rate of 787k. Continuing Claims decreased to 5.52 million, down another 660k from last week. Since the peak in early May at nearly 25 million, Continuing Claims have retreated by 19.4 million. The insured unemployment rate slid another 0.4 percentage points to just 3.8%, the lowest insured unemployment rate since February. The BLS nonfarm payrolls report on Friday is expected to show hiring of roughly 500k in November with the unemployment rate declining to 6.7%.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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